Recs

2
Player Avatar Zimzap (< 20) Submitted: 7/4/2009 4:38:35 PM : Underperform Start Price: $37.37 KMP Score: +3.22

Dividend may appear attractive but is unsustainable at 270+ payout ratio. When the dividend gets cut, the multiple will fall as well causing this stock to fall out of favor.

Low cash position, increasing debt, and trading at significant premium to its industry (30+ for KMP versus ~20 for industry) leads me to believe that the stock is heading for a fall.

The most attractive characteristic of KMP is its low beta of ~.25 but the downward pressures on this stock come from its unsustainable payout ratio rather than overall market movement.

Member Avatar willpeavy (43.41) Submitted: 8/21/2009 12:54:53 PM
Recs: 4

The distribution is sustainable. KMP is a partnership - the accounting is done differently than a typical corporation. So if you're looking at the payout ratio as if KMP were a typical corporation, rather than a partnership, then your analysis will be flawed.

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